Daily Investment Interpretations

August 4, 2009

2009-8-4:  The indices rose slightly on heavy trading at the end of the day. The Nasdaq gained 2.7 points (0.13%) to close at 2,011.31, while the S&P 500 closed above 1,000.  The NASDAQ Composite gained 2.7 points (0.13%) to close at 2,011.31, the Dow climbed 33.63 points (0.36%) to close at 9,320.19 and the S&P 500 rose 3.02 points (0.3%) to end at 1,005.65. Oil closed up at $71.82 a barrel, while gold added $11 to end at $970. The VIX fell 0.67 to 24.89.
    After an unscheduled column yesterday, Michael Ashbaugh has published his regular Tuesday technical column today: Technical Indicator: S&P 500, Nasdaq party like it's 1998. He notes that the NASDAQ and the S&P 500 closed above 2000 and 1,000, respectively, for the first times in 1998. Buy-and-hold investors who bought in 1998 have lost money (through inflation) over the 11-year period. (By the same token, given the long-term 6.8%-a-year inflation-corrected rate of return on the S&P 500, sooner or later, the markets will explode upward, making up for lost time. By now, the markets should double to 2,000 on the S&P 500 and 4,000 on the Nasdaq Composite in inflation-corrected terms.)
     Mr. Ashbaugh concludes that the indices are primed for a pullback. However, a lot of investors are waiting for a pullback, and the markets generally don't do what's expected of them.